The real estate exemption
The Times on Prince Jared’s awesome scam to avoid paying federal income tax:
Over the past decade, Jared Kushner’s family company has spent billions of dollars buying real estate. His personal stock investments have soared. His net worth has quintupled to almost $324 million.
And yet, for several years running, Mr. Kushner — President Trump’s son-in-law and a senior White House adviser — appears to have paid almost no federal income taxes, according to confidential financial documents reviewed by The New York Times.
How? Via deduction for “depreciation.”
But the losses were only on paper — Mr. Kushner and his company did not appear to actually lose any money. The losses were driven by depreciation, a tax benefit that lets real estate investors deduct a portion of the cost of their buildings from their taxable income every year.
Every year? No matter what? But real estate values are going up in most places, not down.
In theory, the depreciation provision is supposed to shield real estate developers from having their investments whittled away by wear and tear on their buildings.
Excuse me??
Why? Why do we do that? Most of us don’t get to deduct anything for “wear and tear” so why do real estate developers?
I suppose the short yet complete answer is lobbying.
The law assumes that buildings’ values decline every year when, in reality, they often gain value. Its enormous flexibility allows real estate investors to determine their own tax bills.
And then use the money they save on taxes to buy the presidency and destroy everything.
The White House last year championed a sweeping revision of the nation’s tax laws that expanded many of the benefits enjoyed by real estate investors, allowing them to reap even larger deductions.
“The Trump administration was in a position to clean up the tax code and promised to get rid of some of the complexity that certain taxpayers use to their advantage,” said Victor Fleischer, a tax law professor at the University of California, Irvine. “Instead, they doubled down on those provisions, particularly the ones they have familiarity with to benefit themselves.”
Of course they did. There’s probably a deduction for eating two scoops of ice cream.
I’m a biologist, so from now on, I’m going to deduct for ‘wear and tear’ on my body. The main difference is that my body does depreciate every year, as my cells age and me with them.
Not doubting that various interest groups influence tax laws in their favour, but to be fair, isn’t it rather unusual, perhaps even a symptom of some economic pathology (such as too much investment money chasing too few productive investment opportunities because we little people don’t have enough money to buy products), that property prices are rising and rising? Why would they, under normal circumstances, given that buildings do tend to decay and become more expensive to maintain over time?
Well in Seattle (and San Francisco, San Jose, etc) it’s because of the tech boom. The population is exploding so housing is scarce so prices are nuts.
But yeah it’s pathological. There should be a lot more public housing with rents pegged to income, which would relieve the scarcity problem. But the US doesn’t do that kind of thing.
There’s silly old me thinking that general maintainance fees are usually part of the rent on a property, and building insurance covers damage repairs, etc., with the tenants liable for the cost of wilful damage or damage through neglect.
Surely, Trump, Kushner, and their developer friends wouldn’t actually receive some or all of the above and take advantage of the tax breaks. Would they? I mean, they always come across as so honest and sincere and not at all like dishonest, profiteering shitweasels.